October 20, 2012

Are We Heading for a Servant Economy?

Jobs in the US are undergoing a huge transformation. People are being laid off from good paying jobs with benefits, and, to the extent they are finding new ones, they are being paid about half what they were at their previous job with no benefits. Most of the newly created jobs in the "promising" recent jobs report were part time or temporary jobs. The September Bureau of Labor Statistics (BLS) jobs report indicated that 114,000 jobs were added in September and that the unemployment rate dipped to 7.8%. This is good news to be sure, but the fact remains that the issue is more about the quality of jobs added than the actual number.

Half of all college graduates are not able to find work. The good jobs out there are only for elite students from elite institutions. Half of all graduates including graduates in science and engineering from universities like Harvard and Duke are going to work on Wall Street. This is where the top talent is going, and they're making big bucks - six figures to start plus signing bonuses. If you are just an average college student though from a run of the mill college, chances are the only job you will find is as a barrista at Starbucks or at the Apple genius bar. The Microsofts, Qualcomms, Googles and Intels are only hiring the top 1% or 2% from elite colleges.

The myth that with a college education you will be able to get a good paying job is being laid to rest. The social contract that, if you work hard, play by the rules and graduate college, there will be a job waiting for you is just a myth. Nowhere in the Constitution does it say anything about guaranteeing college graduates a job. That would be a social contract, and there ain't no social contract.

The Bureau of Labor Statistics projects that for the top ten fastest growing occupations for the years 2010 - 2020, only two will require a college degree. Four don't even require a high school diploma! Two require an Associate's Degree. Jeff Faux in his book, "The Servant Economy," explains why he believes politicians of both parties working for America’s elite are systematically destroying the economic aspirations and quality of life for America’s middle class.

Jeff Faux: "The future — you walk into an Apple store and you think you’re looking at the future, and you are, but it’s not in the technology. It’s in all of those smart college educated kids with the T-shirts on who are working as retail clerks at $12 an hour or so. Now if you talk to them, they will say, well, I’m just here temporarily." But they may still be there well into their 30s. That's what's happening. When you consider the BLS projections about the jobs of the future, you realize that many of these kids, these 20-something’s thinking that they’re going to be on a professional track, are going to be 30-something’s with dead end jobs well into the future. The BLS projections give the lie to the much repeated myth that with a college education you will make more over your lifetime than you will with just a high school diploma. Heck, where the jobs really are is for people without even a high school diploma. And the kids coming out of college that can't find jobs, that is the non-elite kids from non-elite colleges, they are loaded down with student loan debt. They wind up in a dead end job barely able to make their payments to Bank of America and Wells Fargo.

The fact is that corporations are robotizing, computerizing and automating most aspects of most jobs. The kind of work that can't be robotized is outsourced to sweatshop workers in Asian contries where workers slave away for less than a dollar an hour. This is mostly assembly work. For instance, the Apple iPhone is a sophisticated device most of whose parts are manufactured by robots. However, they haven't figured out a way to have robots do the final assembly. So the iPhones are assembled by hand by Foxconn workers in China. These corporations, like Apple, however, are working on robots that will even do this bit of final menial assembly work. At that point they will not even need the sweatshop workers. That is the final goal: a product that can be entirely produced from start to shrink wrap by an automated assembly line without the need for human intervention.

This "hollowing out" of the US economy is nothing new. It didn't just start with the Great Recession of 2008. This is a trend that has been going on for 30 years or more. The first shot fired was Reagan's firing of the unionized PATCO workers. The gradual demise of the unions combined with the globalization of the work force has resulted in the reduction of the status of American workers to the point that the middle class is doing a disappearing act. Some economists would argue that, as the work force is becoming more productive, workers should share in those productivity gains. But its not that the work force is becoming more productive, the robots are becoming more productive. Capital itself in the form of robots is becoming more productive replacing the need for workers altogether. So to the extent that workers are necessary in the production process at all, it's not that they in and of themselves are becoming more productive. It's that less human work is required for the same amount of output due to the fact that robots are doing most of the work. In any event the non-unionized work force doesn't have the power to demand wage increases tied to increases in productivity.

Rana Foroohar in a Time article entitled "More Jobs, Less Pay," says: "Corporate profits are at record highs... and companies are buying plenty of cool new technology. The problem is that they are using it to replace human workers everywhere, with software eliminating white collar administrative jobs and robots getting Chinese factory gigs. ...

"The upshot: while technology is still doing a good job of displacing workers, it's not creating the kinds of megashifts in productivity and income growth that allow for major increases in standards of living."

Service sector jobs have by and large replaced manufacturing jobs and temporary and part time jobs have replaced full time jobs with benefits. Most large employers in the service sector manage their workforce as if their workers didn't depend on their jobs for anything essential like rent or child support. Most Wal-Mart workers are on food stamps. These are great jobs for people who don't really need them to pay their bills. In "No Logo," a book published in 2000 well before the Great Recession, Naomi Klein says: "And so the mall and the superstore have given birth to a ballooning category of joke jobs - the frozen-yogurt jerk, the Orange Julius juicer, the Gap greeter, the Prozac-happy Wal-Mart 'sales associate' - that are notoriously unstable, low-paying and overwhelmingly part-time."

She goes on: "Never mind that the service sector is now filled with workers that have multiple university degrees [and student loan debt], ... laid-off nurses and teachers, and down-sized middle managers. Never mind, too, that that the students who do work in retail and fast food - as many of them do - are facing higher tuition costs, less financial assistance from parents and government and more years in school." Many of these workers who consider their positions temporary, until they can find a real job in their field, end up with a de facto career in a job that doesn't even require a university degree and at wages that can't really support a middle class life.

Instead of entering the "servant economy" where job applicants are expected to conduct themselves in a servile manner, those who are able would be better off creating their own jobs instead of expecting that a university degree will be their ticket to a stable long-term, well-paying job. They should, if possible, be their own "job creators" instead of expecting that the so-called job creators, whose only real interest is in reducing the number of jobs and increasing automation and offshoring, will do it for them. One who creates his or her own job does not necessarily have to be an "entrepreneur," one who comes up with the next "Big Thing." There are plenty of self-created jobs in well established fields which require little if any credentialization. For instance, trades such as carpentry, plumbing, electrical work, handyman, gardening/landscaping, these are jobs which one can create for oneself with little capital investment required. Windowcleaning is a profession that doesn't even require a contractor's license or any formal training in the state of California and hardly any capital investment. I should know: I've been one for 36 years.

And in a country that espouses freedom, one cannot really be free working in a servant economy where in essence one must bow down to your boss or supervisor. That's not really being free. There is no freedom like being self-employed, and earning your living from multiple sources and a large customer base. That way no one customer has any power over you. No one can order you around. Only then are you truly free, and you can tell the so-called "job creators" to go to hell. It really is exhilarating.

Comments

Jobs in the US are undergoing a huge transformation. People are being laid off from good paying jobs with benefits, and, to the extent they are finding new ones, they are being paid about half what they were at their previous job with no benefits. Most of the newly created jobs in the "promising" recent jobs report were part time or temporary jobs. The September Bureau of Labor Statistics (BLS) jobs report indicated that 114,000 jobs were added in September and that the unemployment rate dipped to 7.8%. This is good news to be sure, but the fact remains that the issue is more about the quality of jobs added than the actual number.

Half of all college graduates are not able to find work. The good jobs out there are only for elite students from elite institutions. Half of all graduates including graduates in science and engineering from universities like Harvard and Duke are going to work on Wall Street. This is where the top talent is going, and they're making big bucks - six figures to start plus signing bonuses. If you are just an average college student though from a run of the mill college, chances are the only job you will find is as a barrista at Starbucks or at the Apple genius bar. The Microsofts, Qualcomms, Googles and Intels are only hiring the top 1% or 2% from elite colleges.

The myth that with a college education you will be able to get a good paying job is being laid to rest. The social contract that, if you work hard, play by the rules and graduate college, there will be a job waiting for you is just a myth. Nowhere in the Constitution does it say anything about guaranteeing college graduates a job. That would be a social contract, and there ain't no social contract.

The Bureau of Labor Statistics projects that for the top ten fastest growing occupations for the years 2010 - 2020, only two will require a college degree. Four don't even require a high school diploma! Two require an Associate's Degree. Jeff Faux in his book, "The Servant Economy," explains why he believes politicians of both parties working for America’s elite are systematically destroying the economic aspirations and quality of life for America’s middle class.

Jeff Faux: "The future — you walk into an Apple store and you think you’re looking at the future, and you are, but it’s not in the technology. It’s in all of those smart college educated kids with the T-shirts on who are working as retail clerks at $12 an hour or so. Now if you talk to them, they will say, well, I’m just here temporarily." But they may still be there well into their 30s. That's what's happening. When you consider the BLS projections about the jobs of the future, you realize that many of these kids, these 20-something’s thinking that they’re going to be on a professional track, are going to be 30-something’s with dead end jobs well into the future. The BLS projections give the lie to the much repeated myth that with a college education you will make more over your lifetime than you will with just a high school diploma. Heck, where the jobs really are is for people without even a high school diploma. And the kids coming out of college that can't find jobs, that is the non-elite kids from non-elite colleges, they are loaded down with student loan debt. They wind up in a dead end job barely able to make their payments to Bank of America and Wells Fargo.

The fact is that corporations are robotizing, computerizing and automating most aspects of most jobs. The kind of work that can't be robotized is outsourced to sweatshop workers in Asian contries where workers slave away for less than a dollar an hour. This is mostly assembly work. For instance, the Apple iPhone is a sophisticated device most of whose parts are manufactured by robots. However, they haven't figured out a way to have robots do the final assembly. So the iPhones are assembled by hand by Foxconn workers in China. These corporations, like Apple, however, are working on robots that will even do this bit of final menial assembly work. At that point they will not even need the sweatshop workers. That is the final goal: a product that can be entirely produced from start to shrink wrap by an automated assembly line without the need for human intervention.

This "hollowing out" of the US economy is nothing new. It didn't just start with the Great Recession of 2008. This is a trend that has been going on for 30 years or more. The first shot fired was Reagan's firing of the unionized PATCO workers. The gradual demise of the unions combined with the globalization of the work force has resulted in the reduction of the status of American workers to the point that the middle class is doing a disappearing act. Some economists would argue that, as the work force is becoming more productive, workers should share in those productivity gains. But its not that the work force is becoming more productive, the robots are becoming more productive. Capital itself in the form of robots is becoming more productive replacing the need for workers altogether. So to the extent that workers are necessary in the production process at all, it's not that they in and of themselves are becoming more productive. It's that less human work is required for the same amount of output due to the fact that robots are doing most of the work. In any event the non-unionized work force doesn't have the power to demand wage increases tied to increases in productivity.

Rana Foroohar in a Time article entitled "More Jobs, Less Pay," says: "Corporate profits are at record highs... and companies are buying plenty of cool new technology. The problem is that they are using it to replace human workers everywhere, with software eliminating white collar administrative jobs and robots getting Chinese factory gigs. ...

"The upshot: while technology is still doing a good job of displacing workers, it's not creating the kinds of megashifts in productivity and income growth that allow for major increases in standards of living."

Service sector jobs have by and large replaced manufacturing jobs and temporary and part time jobs have replaced full time jobs with benefits. Most large employers in the service sector manage their workforce as if their workers didn't depend on their jobs for anything essential like rent or child support. Most Wal-Mart workers are on food stamps. These are great jobs for people who don't really need them to pay their bills. In "No Logo," a book published in 2000 well before the Great Recession, Naomi Klein says: "And so the mall and the superstore have given birth to a ballooning category of joke jobs - the frozen-yogurt jerk, the Orange Julius juicer, the Gap greeter, the Prozac-happy Wal-Mart 'sales associate' - that are notoriously unstable, low-paying and overwhelmingly part-time."

She goes on: "Never mind that the service sector is now filled with workers that have multiple university degrees [and student loan debt], ... laid-off nurses and teachers, and down-sized middle managers. Never mind, too, that that the students who do work in retail and fast food - as many of them do - are facing higher tuition costs, less financial assistance from parents and government and more years in school." Many of these workers who consider their positions temporary, until they can find a real job in their field, end up with a de facto career in a job that doesn't even require a university degree and at wages that can't really support a middle class life.

Instead of entering the "servant economy" where job applicants are expected to conduct themselves in a servile manner, those who are able would be better off creating their own jobs instead of expecting that a university degree will be their ticket to a stable long-term, well-paying job. They should, if possible, be their own "job creators" instead of expecting that the so-called job creators, whose only real interest is in reducing the number of jobs and increasing automation and offshoring, will do it for them. One who creates his or her own job does not necessarily have to be an "entrepreneur," one who comes up with the next "Big Thing." There are plenty of self-created jobs in well established fields which require little if any credentialization. For instance, trades such as carpentry, plumbing, electrical work, handyman, gardening/landscaping, these are jobs which one can create for oneself with little capital investment required. Windowcleaning is a profession that doesn't even require a contractor's license or any formal training in the state of California and hardly any capital investment. I should know: I've been one for 36 years.

And in a country that espouses freedom, one cannot really be free working in a servant economy where in essence one must bow down to your boss or supervisor. That's not really being free. There is no freedom like being self-employed, and earning your living from multiple sources and a large customer base. That way no one customer has any power over you. No one can order you around. Only then are you truly free, and you can tell the so-called "job creators" to go to hell. It really is exhilarating.